Correlation Between Vanguard FTSE and IShares Core
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and IShares Core at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard FTSE and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Canada and iShares Core MSCI, you can compare the effects of market volatilities on Vanguard FTSE and IShares Core and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard FTSE with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and IShares Core.
Diversification Opportunities for Vanguard FTSE and IShares Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Canada and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI and Vanguard FTSE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard FTSE Canada are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and IShares Core go up and down completely randomly.
Pair Corralation between Vanguard FTSE and IShares Core
Assuming the 90 days trading horizon Vanguard FTSE Canada is expected to generate 0.86 times more return on investment than IShares Core. However, Vanguard FTSE Canada is 1.16 times less risky than IShares Core. It trades about 0.32 of its potential returns per unit of risk. iShares Core MSCI is currently generating about 0.17 per unit of risk. If you would invest 5,015 in Vanguard FTSE Canada on August 29, 2024 and sell it today you would earn a total of 199.00 from holding Vanguard FTSE Canada or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Canada vs. iShares Core MSCI
Performance |
| Timeline |
| Vanguard FTSE Canada |
| iShares Core MSCI |
Vanguard FTSE and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and IShares Core
The main advantage of trading using opposite Vanguard FTSE and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, IShares Core can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Core will offset losses from the drop in IShares Core's long position.| Vanguard FTSE vs. iShares SPTSX 60 | Vanguard FTSE vs. iShares Core SP | Vanguard FTSE vs. iShares SPTSX Composite | Vanguard FTSE vs. iShares Core MSCI |
| IShares Core vs. Vanguard FTSE Canada | IShares Core vs. Vanguard Canadian Aggregate | IShares Core vs. Vanguard Total Market | IShares Core vs. Vanguard FTSE Emerging |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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